Good afternoon, everyone. We'll move to the next session. Thank you. If you can take your seats. I'm Samik Chatterjee, I cover the hardware companies at JPMorgan. For the next session, we have Arista. From Arista, we have Ita Brennan, CFO, as well as Liz Stine from Investor Relations. Thank you both for coming to the conference. I'll really just start off with more sort of a macro question and a few questions we've been asking most of our companies to comment on. Just remainder of the year, obviously the macro backdrop remains a bit more challenging, but as you think about macro risks, what are the biggest risks that you perceive to your business?
Yeah, I mean, I think certainly the macro overall environment is offering, you know, lots of uncertainties. You think about debt ceiling, you think about, you know, all the banks, think about interest rates. Yes, so there is a lot happening at a macro level. You know, I think when you take that back to the business, we still haven't seen a tremendous kind of direct impact on the business. We talked about this on the earnings call a little bit where, you know, on the enterprise part of our business where we're really targeting larger, you know, big bet type companies, you know, we've seen that continued engagement, you know, in spite of kind of some of these backdrops. You know, obviously we'd be foolish to ignore those. We're gonna continue to monitor and look at that over time.
We haven't really seen that, you know, that impact on the business yet. You know, I think on the hyperscale side of the business, on the cloud part of the business, you know, that's more of a, you know, a cyclical question, right. We've talked about this a little bit, where we've come off some very accelerated growth with cloud, where cloud grew triple digits last year. We do expect that there will be some moderation in that spending. Is that macro? Is that not macro? I mean, I think it's just more of a, more of a cyclical kind of product cycle related trends, and we'll see where that goes as we move through the year and get some better visibility.
Okay. Just to follow up on that, I mean, one of the things, as you mentioned, like you haven't seen the maybe the macro impact you as much, but we've seen with a lot of other hardware categories, and I think even during sort of the sessions I've hosted today, it's come up that there was a pull forward of capacity by the hyperscalers in terms of their own investments towards capacity. How much of the slowdown you're expecting is largely a function of maybe a pull forward of demand from their side to add capacity and when you sort of look forward, it's more sort of just waiting for them to digest that capacity and move forward? Or is there a change structurally in how they think about their growth rates on public cloud revenues and that's changing their outlook for how they spend?
Yeah. I think, you know, we had come through a very, interesting period of... from supply chain perspective where, you know, you definitely saw a lot, a lot more visibility, from these customers in terms of what they needed to deploy, and we were able to kind of lay out deployment plans in advance and over a longer, period of time than we would normally, see. I think we've tried to be, you know, to have a good understanding of what was being deployed and when, and we're still working through that even now. I think the question is kind of once you get through those deployments, you know, what does the trajectory of that, investment look like, as you head into 2024 and beyond, right? I think that's something that, you know, there's been...
These companies are looking at their architectures, they're looking for efficiencies, et cetera. You know, they've talked about wanting to do the things that they need to do for their business. I think their CapEx has been reasonably resilient even through this. I think we're just gonna have to wait a while to see, you know, exactly how that plays out, and we probably won't get visibility to kinda enter that timeframe until later in the year.
Okay. Obviously one of the questions that I'm sure you answered all morning is the impact of AI on your business. Largely, I think, obviously sort of the infrastructure spend is what everyone's focused on, but maybe flesh it out a bit more in terms of where you see the opportunities. Is there any sort of offset to think of in terms of where the business gets disrupted at the same time? Just help us think through that.
Yeah. I mean, I think, you know, for us it's early. You know, Jayshree talked on the earnings call about the fact that we're at the beginnings of understanding what AI really means and what the, what the technology will look like. We have deployed some AI use cases, but it's relatively small. I think we look at it as, you know, it's a good underpinning of, you know, kind of future momentum and demand, particularly from some of the larger hyperscale customers. It's, it's a reason why these technology cycles that are coming, upcoming are going to be important. It's a reason why, you know, everybody's so focused on making sure that those cycles happen and happen in a timely manner. I think that's all positive.
You know, it doesn't necessarily mean that tomorrow everything changed and, you know, there isn't a lot of work to do, to get to kind of those new products and to get to those cycles, and that there isn't a lot of technology, you know, challenges to sort out. That's, that's okay too, right? That's really what we do. You know, AI is a driver for innovation and for new technology changes, speed of deployment, all of that is positive for us. Exactly what it looks like kind of in this time slotted period, it's really too early to start to fully understand that yet.
Okay. Since we're on the topic of AI, any way of sort of that you've quantified how big the opportunity for Ethernet switching is? How do you think about the risk from InfiniBand remaining a core part of that market or dominant in that market, and Ethernet not being able to displace InfiniBand as a technology?
I mean, you know, if you look at the data that we have today, high-performance computing use cases, it's roughly 50/50 split between Ethernet and InfiniBand today. Obviously, that's almost pre-AI, but it does give you some indication or some place to start. You know, our belief is that, you know, if AI turns out to be so critical and embedded in all of these business processes, if that's really where this goes, you know, you're going to want to deploy this technology pervasively across these large cloud footprints. I think that's where, you know, we believe that Ethernet has some advantages, right? In terms of being able to scale. It's standards-based. It's already deployed in a lot of these footprints already. It's standards-based.
There's lots of expertise around it, et cetera. There's a lot of advantages when you think about getting to scale that we believe kinda comes with Ethernet. It's not completely solved today. You know, we need the new speeds. The team's working on, you know, you hear Anshul talk about near lossless fabric, but it does need to be near lossless or lossless fabric. There's work to do, but again, if you really think its scale is your end game, then, you know, we believe Ethernet has a role to play there. That's where Ethernet kind of has some real advantages. Again, we're gonna have to work through this, but I think, you know, that's if it's a scale play, we think Ethernet can play a role there.
Doesn't mean that InfiniBand is not gonna have a role, it's just kind of the scale will, in our minds, favor Ethernet.
You mentioned moving to sort of next generation speeds or higher speeds and being critical in that, obviously there's sort of latency, et cetera, that comes into the equation here. Does it change how fast these upgrade cycles are? You've been in the midst of a 400 upgrade cycle. Does that 400 Gig sort of naturally then bleed into the next upgrade cycle muting some of the cyclicality that you've seen with your customers?
I think it's too early to really know that, honestly. You know, we always want these cycles to go faster, and it seems like every time we've done one, there's some really urgent reason for why they have to go faster. I'm not sure how much that actually makes them go faster, right? I think there's definitely gonna be energy around trying to have this happen more quickly. I think experience has taught us that it's still hard to... There's real work that has to get done. There's an ecosystem that has to get kind of formed around these deployments, particularly at scale. I don't know how much faster it really goes in the end.
I think it's great that there's energy and there's, you know, reasons why we want to make this happen faster, but I think it's, yeah, it may still take some time.
Okay. Sure. You mentioned on the last earnings call that you're already qualifying or sort of, sampling some products with your customers. Maybe help us think through what that timeline looks like. Where you are today, how much of a timeline does it look like when you're at that spot to sort of get something commercially into the market? Just trying to think about lead time to revenue here.
I mean, we do have some revenue today coming from AI use cases. It's hard for us to track it exactly because it's obviously the 7800 Series platform that's being deployed, and it gets deployed into DCI and other use cases as well, right? There is some, you know, some traction around AI with that platform, but again, it's small, right? I think it's more, you know, as customers kind of vet the solution and then start to deploy, we'll start to see some more revenue. Again, I'd go back to Jayshree's comments on the call. I think it will take some time for it to become, you know, a meaningful revenue driver.
When you say you track the use cases that this might be going into and it's difficult, I think there has been some confusion on the investor side, just given some of the other companies, including semiconductor companies, mentioning more sort of exact revenue numbers that they're doing in terms of AI chips. I mean, is it really that easy to discern at this point what's going into AI use case for you, what's not, and how are you classifying it? Are you looking at, like, the customer, do you have visibility into what the customer is using it for, or is it more of, like, trying to triangulate based on what chips are in the, in those systems?
Yeah. I mean, it's not something that we can count kind of from a financial system with a very nice kind of black and white delineation, right? Which is obviously where we'd like it to be. Because it's a multi-use product set, right? It's not just an AI platform. The 7800 Series is our workhorse product, that we'll deploy into large spine use cases across the business. It's, it's hard to get a very specific number. It's much more qualitative, when you try to put some numbers around that.
Okay. I think one of the things that's come up is, obviously, Arista's gained a lot of share over the years and used the 100 Gig and then the 400 Gig as a key driver of share gains. As we think about AI, does it create an opportunity for further market share shifts, either in favor, or does it open up more, the ecosystem to more suppliers, new suppliers to come in? How do you ensure you stay on top of sort of continuing that progress on market share?
Yeah. I mean, it all still comes back to execution, right? I mean, I think we've, you know, we've gone through multiple cycles coming into the 400 Gig cycle. I think there was a lot of concern at the investor level about, you know, could we maintain our position. I think we're very happy with kind of how we came through that cycle. It's all about execution, so now you need to go do that again at 800G. I think, you know, in times of change and customers having, you know, new demands, new needs, new use cases, that has favored Arista in the past, right? I think that the team is kind of excited about getting involved in some of those and helping to solve some of those use cases. Again, you have to execute.
You gotta deliver good quality products early in the cycle and have them scale. I mean, that's the key to this. We just need to stick to the playbook, if you like, and continue to execute on that.
Just going back to your last analyst day, you talked about a five-year revenue CAGR of 20%. As we look to future periods and I think this is again sort of asking you to think about what the AI sort of in relation to magnitude could be, but is it sort of natural to expect that when you think about longer-term revenue CAGR, AI is sort of additive to it, overall?
I mean, again, I think it's hard to completely separate those at this point, right? I know some of the industry analysts have tried to put, you know, some numbers on kind of what an AI, high-speed switching, Ethernet switching number would look like. I think it's extremely difficult to do that, right? 'Cause again, it comes back to just how fast can you kinda resolve some of the technology issues, how fast do you have the new products, and then, you know, how does it ramp? I think, you know, for us, again, we come back to it more as it's underpinning, you know, healthy growth, hopefully from the hyperscale piece of the business in particular, over a period of time and a good period of time.
I think that's very positive to come back to kind of again, what the slope of the curve is like. I don't think we have a good answer to that yet.
Okay. Okay. Staying on the topic, I think you said there are some modest amount of revenues that you're seeing on the AI use cases. I think, one of the question that keeps coming up is how much of the like your key customers like Meta, have already been doing some level of AI investments, how much have you been able to leverage of that already? Particularly any insights on sort of which technologies each of your customers are trying to favor, relative to Ethernet versus InfiniBand? Meta did have a recent announcement in terms of just sort of setting their priorities in relation to how they want to invest in AI versus the non-AI sort of infrastructure. How do you think about implications on your switching business from that?
Again, I think there's gonna be multiple paths here in terms of how these customers are going to go, you know, address this, right? It's. We were talking earlier today about, you know, when there's lots of changes and the technology shifts, it's messy, right? There will be, you know, there will, we will see customers have multiple different strategies. We're gonna see them have phase strategies. We're gonna see them try to drive efficiencies and drive, you know, better cost outcomes as they move through this, right? That's, that's not unusual when you've got kind of new lots of new products kinda coming to market around the same time. I think we're gonna have to work through that with each of these customers over the next while.
Again, you know, we have that relationship, so we do have kind of that engagement, but it's gonna take some time for us to work through it.
Ita, you keep referring to that the ecosystem needs to build out out further, like, on the Ethernet side, particularly to compete with InfiniBand. Traditionally or historically, you've sort of taken the approach of more partnering on that side to really help out. As you think about where you stand today, is then there's sort of a more active evaluation of whether you can sort of wait to partner with companies, or do you want to sort of take a more active approach in vertically integrating and helping the ecosystem build out quicker?
Yeah. I mean, I think the ecosystem, you know, both of these technologies have to have to evolve if they're gonna satisfy the need. It's not just that Ethernet has a, you know, has a challenge. You also have InfiniBand being, you know, limited in terms of how it scales, et cetera. There's gonna be need to be development on both sides of that, of that equation, right? I think it's, you know, on the on our side, it's more as we move through these speeds, obviously there needs to be optics and other things that come with that. You know, we still don't believe you have to control an individual entity to make that effective. You really want to be able to influence the ecosystem, right?
I think we do a good job, a very good job of kind of engaging with the different partners and helping to kind of, you know, drive a roadmap, drive an outcome, and not having to choose, you know, or become an individual player there. You get a lot more leverage and ability to influence the ecosystem when you're somewhat neutral, and you can help drive that roadmap. I think that's still the strategy. You know, it has been effective for us, and I think we'll continue to do that over time.
Okay. Okay. Let me open it up and see if there are any questions the audience has. Just wait for the mic. Sorry.
Hi, good afternoon. Just on the AI revenue opportunity, is there any sort of conceptual framework you'd be comfortable providing in terms of how to think about that specifically with respect to maybe as an attach rate to GPU sales? The concept being for every $100 you spend on GPUs, maybe you need, making up a number, $10 of networking equipment to prevent any bottlenecks developing in the data transfer network. Anything similar to that you could frame for us to help us quantify or think about that?
Yeah. I mean, I don't know that we're quite there yet, right? We haven't offered, or that we have enough kind of experience yet to be able to kind of build out that type of framework. Right? You know, we've seen some very early data about, you know, the network being a bottleneck and causing kind of underutilization of the GPUs in certain cases. Again, that was a very early kind of point in time, scenario. I think we're not quite there yet where we could kind of create a framework that would be predictive. I think we need to see some more experience before we're gonna be able to do that.
Any other questions?
Thank you, Ita. You mentioned objects being one of the things that you guys are thinking about or working with. Can you just describe that ecosystem? When do you think that it could be really adopted in scale? I know that there's a lot happening in innovation, but if you could just elaborate a bit more on your optics comment.
Yeah, I think, you know, as we work towards a new product set, new speed transition, you know, one of the things that's important is to kind of work with everybody in the ecosystem to make sure that, you know, there's alignment on all of the other pieces that we don't necessarily control, but that you want to have kind of happen and, you know, be viable, so that you're able to kind of move at the speed that the switch wants to move at, basically, right?
We, you know, we do spend quite a bit of time, the team spends quite a bit of time working with the different players in that optical space to make sure that there's kind of clarity around, you know, what are the optics needs, and how can they best be solutioned as we go through these cycles, right? Again, I'm not probably not the right person to try and get into the very specifics of those technologies, but that's kind of. You know, you'll hear Andy, for example, Andy Bechtolsheim, our founder, talk a lot about optics. The reason why is obviously because you're trying to make sure that there's a clean path for kind of the switching and the and those products coming to market.
When you think about your business today versus three years ago, would you say there's been a shift in the importance of owning the customer relationship versus having the best product?
I think we're fortunate that the best product is still super important in networking, right. Even, you know, when you think about kind of these, even these large customers, they tend to want to buy best of breed. They tend to want to focus on, and they're very capable of putting all the pieces together themselves, right. They really want, like, technology drivers and, you know, technology visionaries, if you like, people who can help kind of plan ahead and solve problems for them. I think that's, you know, that engineering-to-engineering connection is still fundamentally important, and then executing against those, right. You can, you know, you can own. You won't own a customer relationship for very long if you're not kind of bringing the products and the technology to market and delivering kind of on what you commit to.
Okay. Let me take this question that came in, and see if you have a comment on this. It says, "Could you comment on Ethernet versus InfiniBand debate, how that is evolving with AI? How could open source AI models change the dependence on vendor-specific GPUs and InfiniBand for AI?
I'm sorry, can you read that again?
Just the reliance on GPUs and InfiniBand as a technology. The same, pretty much the same question.
Yeah. I mean, I think our view, again, is, you know, best of breed, best solution is what's gonna win out here, right? They'll be, you know, each of these pieces will end up being evaluated on their own merits. Again, for the, you know, for the switching piece, we think Ethernet will have a role to play. You know, when you're in that Ethernet space, you know, we believe we have a role to play in that. Again, lots of work to do, I think that's kind of that's how we see it.
Okay. Let me switch gears here. You've talked about engagement with Google as a customer, sort of starting to build up a bit, and Anshul's talked about it. Any sort of update on that? Where's progress? I think one of the questions we keep getting is then sort of when... how should we think about the insertion opportunity there? When is the right time? Is it really related to AI? Is it more related to sort of think about the next speed, 800 Gig? How should we think about it?
Yeah. I mean, I think, you know, we've talked about this a little bit. You know, there's obviously been lots more discussion about it, that's not necessarily originating from us. I think, you know, from a technology perspective, you know, we've done some work. We'll continue to do work there. At the end of the day, it's gotta be the customer's decision, right? If they wanna deploy more broadly, with the products. I think our job is to make sure we solution any technology gaps, et cetera. You know, it's really gonna be up to the customer from there. There's really nothing new to say to that until... I mean, it's really their decision.
Okay. Okay. Coming back to the core business. If we talk about the 200 Gig, 400 Gig upgrade cycle, where are you in terms of, those upgrade cycles with your two key customers there? Sort of how should we think about the length of that upgrade cycle? What are you seeing in terms of growth rates on those?
I mean, if you think we saw probably first revenues, real revenues, material revenues in leveraging that silicon. Again, it's kind of a 100 Gig, 200 Gig, 400 Gig, right? It's just the silicon's been used to build products with various different configurations, depending on the customer and depending on their architecture. We saw that first revenue probably back end of 2021, right? You know, there's still a fair amount of time left where you will be deploying these products right through until you have the next, you know, the next silicon. Then you'll see those 800G will get added to that, but you'll also probably have a whole new slew of 100 Gig, 200 Gig, and 400 Gig products that will leverage that silicon.
The cycles have become, you know, it's a little bit more complex. It's not like there's a black line between one cycle and the next. It's just leveraging that silicon to get you the best, the densest, better, best cost per port, kind of at those various speeds. I think 100 Gig is gonna be with us for a long time. It's just gonna transition through the various silicon products.
Okay. Then sort of if I put that in context of what you just outlined at the start of the discussion in terms of a slowdown in the growth with the cloud companies because they go through a digestion. What you're really sort of indicating is the slowdown on account of some of the CapEx cuts that they've announced. I mean, help us think through sort of when you think about drivers of that slowdown How much of that is just not as many new data centers coming in versus a slowdown in the upgrade cycle because you've gone through the peak of that?
Yeah, I think, look, the CapEx actually is... If you look at their CapEx publicly shared CapEx numbers, it's been reasonably resilient, right, through this. They've had a lot of discussion around optimization, improvements, et cetera. They're sorting through kind of what their priorities are and what those are gonna look like. It's not like we have perfect knowledge about what happens next with them, but I think having gone through the cycle between 100 and 400, you know, it behoves us to think that there could be some cyclicality there, right? You know, we'll start to understand that better once we get closer to the end of the year. You know, they've grown.
We definitely think it's gonna moderate off of, you know, triple-digit growth last year and, you know, healthy growth again this year. You know, where exactly that ends up, we're just gonna have to wait a while to get some bottoms-up validity around that, right? You know, they'll continue to spend for sure. The question is at what level and what does that look like.
Okay. Okay. Pulling back a bit to the aggregate company level, not just cloud. I think most You don't disclose backlog or what's happening with orders, but most of the other networking companies have this dynamic of backlog moderation, orders being down double digit. How can we think about and sort of any ballpark way of thinking about your what you're seeing, which are the customer verticals you're seeing sort of the most slowdown in terms of momentum, and in terms of when you think about backlog and sort of winding down that elevated backlog, when do you expect to have that sort of back to a normal level?
Yeah, I mean, I think, look, we never talked about orders on the, on the other side of this as well for the simple reasons it didn't really make any sense, right? To take, you know, extended lead times three, four times, extended lead times, orders were always gonna be distorted by that, right? We tried to stay very focused on let's understand what needs to be deployed and when, right, and continue to kind of execute against that deployment schedule. You know, what we've talked about now is obviously lead times are getting better. Visibility will reduce, right? That's not necessarily good or bad in itself, right? It's really more about when will you know kind of what that next period of time looks like, what that new, that next piece of business looks like.
You know, instead of knowing that 12 months out, you're gonna know that six months out, right? We have to work through that. We're just moving back to a more regular lead time based business. What actually happens is gonna be more dependent on the things we've talked about, right? Where, you know, where do customers want to spend? I think our enterprise business has remained reasonably robust so far, so we'll see how that continues, and then we've had kind of the hyperscale conversation already, right?
The comment about enterprise remaining resilient, that's orders, not just a revenue.
That's engagement. I'm gonna stay away from the order discussion just because again, it's all tied into the whole lead time, extension and contraction, and it just distorts the whole thing. Engagement with customers, you know, coming, winning customers, et cetera, I mean, that has remained reasonably resilient.
Okay. Let me just open it up again and see if there any questions or, I can move on to other parts of the business. Okay, go ahead. Mike, sorry.
Thank you. Just as a follow-up to my question before, talking about, having the best product being key. Is that the best product for the industry, or is there any differentiation in terms of the best product for an individual customer? If you've worked with that customer over time, does that put you in a better position to keep producing the best products for them?
I mean, I think there's a base, obviously, level of, you know, discipline around software and hardware development that needs to span all customers, right? Then, you know, there's a lot to be said for having, you know, these technical engagements, direct technical engagements with the R&D teams on both sides and planning for what that customer specifically needs, right? I mean, ultimately, you'd like to be building a product that's as, you know, as leverageable and transferable as possible, right? We'll always try to do that and find the best solutions that fit within that framework. When you're working very closely with a customer, then, you know, being able to kind of solve their specific needs is very valuable in building relationships, solving problems, responding quickly to issues and problems, because stuff happens, right?
It's how fast how quickly can you solve problems, fix problems. Those types of things are what build that customer experience, that customer relationship, right? Can you have your customer look back on the last period of time and say, "Okay, that was a good, strong technology partnership"? That's really important, right? Everybody remembers everything that ever happened to them in their data center in this industry for a very long time, right?
I'll take this one that came in. How would you describe the relationship with Broadcom and the establishment of a long-term supply agreement? Do you think the relationship could change in the future? Any chances of having a second supplier?
Yeah, I mean, look, we have tried, leveraged every merchant silicon option that has come along, right? There's no reticence on our part to go look at other suppliers, and honestly, Broadcom understands that, right? It all comes back again to performance, right? They have executed really well on product by product, multiple families. They've moved faster than everybody else, right? At the end of the day, that's why the partnership works so well, because they're doing everything that they're supposed to do, we do what we need to do, and you get to a compelling overall system solution. Hopefully, that continues. I mean, they're certainly very vested and interested in, you know, continuing to execute well in this space and, you know, they've been a good partner.
Okay. What is Arista lacking to gain higher traction in the service provider segment?
Yeah, I think, you know, we did not try to go back and rebuild all of the protocols and all of the software that had been deployed in that part of the business historically, right? We started out in switching, then we moved to routing. When we moved to routing, it was kind of a switch router-based product set with a completely new set of protocols to support that routing capability. We need the technology to shift towards cloud, which we believe it will eventually because that's the best, most cost-effective solution, but it's gonna take time to do that. I don't think even if we had gone back and retrofitted, we would necessarily have won 'cause there's lots of suppliers there doing that for a long time.
We believe if and when they move to that, more cloud-based kind of architecture, you know, then we have a credible seat at the table, but that needs to happen.
I did want to go back to the long-term supply agreements. I think the biggest thing that stood out from the last earnings report was really the inventory increase on the balance sheet. I mean, you sort of explained some of it as sort of the product that's coming in as on account of the supply agreements that you have and the purchase commitments that you've already done. How should we think about when does the inventory on the balance sheet peak as on account of that?
Yeah. I mean, there's obviously lots happening around supply now. We're very focused on kind of, you know, putting all of that back in the box, right? I mean, you had to kind of take things out of the box to make sure you had products and that you could supply product. Now we're kind of starting to put things back into the box. We're starting to see lead times come in across a lot of components. We'll make sure that we benefit from that, and that we leverage that, and that we drive that. You know, on the long lead time key components, obviously we have to still live with the current lead times, and that's some of what you're seeing in that inventory build is really the build in raw materials, for those key components, right?
I think by the end of the year, we should start to see kind of the inventory flatten out and start to come down. You know, we brought the purchase commitments plus inventory down about $400 million in this quarter just gone. We'll continue to drive kind of that back to more normal terms here over the next while. It's gonna take a while 'cause we knew, you know, we knew we were in a multiyear kind of component game, so it's gonna take time to unravel.
Switching to margins on this question. It says, you've consistently outperformed on the operating margin. Do you think you could envision the possibility to have a higher optimal gross and operating margin framework in the next three years?
You know, I think what we still come back to, we've talked about this ±40% as a longer-term operating margin model, assuming that we can find, you know, things that are accretive to the business and to the, to growth, to invest in, right? I think that's still the right way to think about it. You know, we will outperform that sometimes, especially in periods of accelerated growth, top line growth, 'cause you obviously don't spend to that peak. You shouldn't spend to that peak. I think over time, you know, we will reserve the right that if there's things we can do that kinda will help the business in the future, that we should go and make those investments.
Last quick one. Capital allocation priorities. You've been building cash, and I think everyone's sort of scratching their head, what do you do with it?
Right now it's in inventory to some degree. Some of it anyway.
How do you think about the uses of it longer term if you continue to sort of partner with companies rather than go the buy route on them?
Yeah. I mean, we've been returning... We just looked at the capital, the repurchase program since its inception, and we've returned 50% roughly of what we generated, which is kind of what we set out to do, and offset dilution. I think that's our baseline. It is opportunistic. We'll continue to be opportunistic, but that's kind of the baseline. Then once we're through the working capital stuff, we can see kind of, you know, what do we do with that program, in that, in that environment. For now we wanna get through that.
Great. I'll wrap it up there. Thank you. Thanks for the time.
Okay. Thanks very much.
Thank you everyone.
Thank you.